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Daily Agenda: Greek Aid Approved
EU and IMF agree to release funds, relieve Greek debt; Monsanto rejects Bayer offer but courtship continues; SEC probes Alibaba; PBOC lowers yuan peg; Tiffany results bad news for luxury market.
After a day of heated discussions in Brussels on Tuesday, Eurozone finance ministers and representative of the International Monetary Fund reached an agreement over freeing up more than $11 billion in aid for Greece, in a deal endorsed by Moodys Investors Service. Critically, a plan for debt relief has taken shape, although the restructuring may not begin until 2018 and only under conditions of further austerity measures. While the most recent deal is far from a fix for Greeces economic woes, it buys time for the rest of the Eurozone and potentially aids the remain voting bloc in Britain by alleviating one major concern.
Monsanto rejects offer, Bayer to press on. On Tuesday, the board of directors of St. Louis-based agrichemical company Monsanto formally rejected a $62 billion buyout offer from German chemical firm Bayer. Monsanto declared that the price was insufficient but did not dismiss the advantage of a merger. Within hours of the announcement, Bayer executives said that talks with Monsanto would continue, setting the stage for a higher offer price.
SEC investigates Alibaba. In a statement issued on Wednesday Chinese online retail giant Alibaba Group Holding announced that the Securities and Exchange Commission has begun an investigation into accounting practices at the company. According to the statement, the investigation is in preliminary stages and the SEC has not made any claims of malfeasance.
Yuan slumps against dollar in face of possible U.S. rate hike. The Peoples Bank of China lowered the yuan reference rate by 0.3 percent earlier today to the lowest level versus the U.S. dollar since 2011, as the central bank seeks to get ahead of a possible Federal Reserve rate hike in June. On Wednesday, Bloomberg News reported that Chinese officials intend to use the annual U.S.-China Strategic and Economic Dialogue scheduled for June 6 as a venue to get further clarification on the timing of upcoming Fed hikes in an attempt to calibrate a policy response.
Citi remains leading foreign-exchange trading house. In a survey published by Euromoney Institutional Investor on Wednesday, Citigroup was ranked as the leading liquidity provider for global currency markets with a total market share of nearly 13 percent. Notably, Deutsche Bank slid from second place in last years ranking to fourth as the German lender unwound trading operations and banks overall saw their share of transactions in the market shrink in favor of electronic venues.
Shell to cut more staff. In a statement released on Wednesday, Royal Dutch Shell announced that total headcount will be reduced by an additional 2,200 bringing layoffs for 2016 to more than 5,000 as the company continues to cut costs because of lower oil prices. The move came as Shell digests the operations of BG Group, which significantly increased its reserves but also added debt to its balance sheet.
Tiffany earnings signal hardship for luxury retailers. First quarter financial results issued by Tiffany & Co. on Wednesday included sales that were weaker than consensus analyst targets, with total revenues that declined by more than 7 percent year-over-year. A combination of a stronger U.S. dollar and declining demand in Asia and Europe were cited by company executives for the shortfall.